SEC Filings

<PAGE>
certain transactions with affiliates and certain mergers and acquisitions. The
Senior Credit Facility also requires Renaissance Media to maintain specified
financial ratios and to meet certain financial tests. See "Description of the
Notes" and "Description of Certain Indebtedness." The ability of Renaissance
Media to comply with such covenants and restrictions can be affected by events
beyond its control, and there can be no assurances that Renaissance Media will
achieve operating results that would permit compliance with such provisions.
The breach of any of the provisions of the Senior Credit Facility would, under
certain circumstances, result in defaults thereunder, permitting the lenders
thereunder to prevent distributions by Renaissance Media and to accelerate the
indebtedness thereunder. If Renaissance Media were unable to pay the amounts
due in respect of the Senior Credit Facility, the lenders under the Senior
Credit Facility could foreclose upon any assets pledged to secure such payment
or otherwise prevent the distribution of funds by Renaissance Media. In such
event, the holders of the Notes might not be able to receive any payments
until the payment default was cured or waived, any such acceleration was
rescinded or the indebtedness under the Senior Credit Facility was discharged
or paid in full. Any of such events would adversely affect the Obligors'
ability to service the Notes, including but not limited to the Obligors'
ability to pay cash interest on the Notes.
OPERATIONS AS AN INDEPENDENT COMPANY
Prior to the Acquisition, the Systems were operated by Time Warner since
January 4, 1996 and prior to such time were operated by CVI from September 12,
1986 (in the case of the Tennessee System) and December 31, 1988 (in the case
of the Louisiana Systems). Although the Management Investors had extensive
experience managing the Systems prior to the acquisition of CVI by Time
Warner, no financial or operating history of the Systems as an independent
entity and not as part of a large multiple cable television system operator
("MSO") is available for potential purchasers to evaluate. Because the Company
has retained much of the Systems' prior regional personnel and the Management
Investors have experience managing the Systems, the Company believes that it
will have personnel and systems in place prior to the consummation of the
Acquisition sufficient to permit the Company to operate the Systems without
assistance from Time Warner. Time Warner manages certain programming for the
Company, although the Company has lost certain programming discounts that were
available to the Systems when they were part of a large MSO. In addition, as a
result of the purchase accounting adjustments arising in connection with the
Acquisition, the Company's annual depreciation and amortization charges will
increase. The above factors, together with increased interest expense
associated with the Notes and the Senior Credit Facility, will have a material
adverse impact on the Company's results in the future. See "Pro Forma
Financial and Other Data."
SIGNIFICANT COMPETITION IN THE CABLE TELEVISION INDUSTRY
Cable television systems face competition from alternative methods of
receiving and distributing television signals and from other sources of news,
information and entertainment such as off-air television broadcast
programming, newspapers, movie theaters, live sporting events, online computer
services and home video products, including videotape cassette recorders.
Because the Company's franchises are non-exclusive, there is the potential for
competition with the Systems from other operators of cable television systems,
including systems operated by local government authorities, and from other
distribution systems capable of delivering programming to homes or businesses,
including direct broadcast satellite ("DBS") systems and multichannel
multipoint distribution service ("MMDS") systems. Additionally, the FCC
recently adopted new regulations allocating frequencies in the 28 GHz band for
a new multichannel wireless video service called local multipoint distribution
service ("LMDS") that is similar to MMDS, and the FCC initiated spectrum
auctions for LMDS licenses in February 1998. In recent years, there has been
significant national growth in the number of subscribers to DBS services.
Subscribership to MMDS also is increasing and can be expected to grow.
Additionally, recent changes in federal law and recent administrative and
judicial decisions have removed certain of the restrictions that have limited
entry into the cable television business by potential competitors such as
telephone companies, public utility holding companies and their subsidiaries.
During 1997, the Jackson, Tennessee Public Utility Department, which as of
March 31, 1998, encompassed approximately 34,000 homes passed by the Tennessee
System, and approximately 23,000 basic subscribers (excluding bulk
subscribers), representing approximately
22